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    Question

    The process of transformation of physical shares, commercial paper or certificate of deposit into electronic form is called as -

    A Securitisation Correct Answer Incorrect Answer
    B Share truncation Correct Answer Incorrect Answer
    C Dematerialisation Correct Answer Incorrect Answer
    D Electronification Correct Answer Incorrect Answer
    E Share Digitisation Correct Answer Incorrect Answer

    Solution

    Dematerialisation is the process of converting physical shares into electronic format. An investor who wants to dematerialise his shares needs to open a demat account with Depository Participant. In order to mitigate the risks associated with share trading in paper format, dematerialisation concept was introduced in Indian Financial Market. Dematerialisation or Demat in short is the process through which an investor’s physical share certificate gets converted to electronic format which is maintained in an account with the Depository Participant .

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